RIO DE JANEIRO, Nov 11 (Reuters) - Brazilian shipbuilder OSX Brasil SA filed for bankruptcy protection on Monday, becoming the second company controlled by former billionaire Eike Batista to seek court protection from creditors in just over a week.
The move, confirmed by the company shortly after a source told Reuters the filing was underway, follows a decision by the OSX board on Friday to pursue bankruptcy proceedings.
The petition was made to the same court in Rio de Janeiro where Batista's oil company OGX Petróleo e Gas Participações SA <OGXP3.SA sought protection from creditors on Oct. 30. Citing 11.2 billion reais in debt ($4.8 billion), it was the largest bankruptcy filing in Latin America.
It remains unclear how much of its 5.34 billion reais ($2.29 billion) in debt OSX wants to restructure.
In a securities filing on Friday, the company said parent company OSX would file for protection along with two subsidiaries: OSX Construção Naval S.A. and OSX Serviços Operacionais Ltda. The company did not mention a third unit, OSX Leasing, which owns three platforms that are leased for oil exploration purposes.
Friday's statement added that OSX had fired its chief executive and named Angra Partners, a Brazilian financial advisory firm that is also advising OGX, to manage its restructuring.
The OSX petition continues the dismantling of a sprawling energy, minerals and logistics empire that Batista, a Rio-based entrepreneur who was once the seventh richest man in the world, created over the past decade.
Before the OGX and OSX filings, Batista had already agreed to sell stakes and key assets of the other four publicly traded companies in his ailing EBX conglomerate, which he built over the past decade by leveraging rising worldwide demand for commodities and soaring investor interest in Brazil at the time.
Over the past year, though, the empire collapsed under a mountain of debt after missing production and profit targets. The missed targets caused investors to sour on Batista, quickly diminishing the value of his empire and crippling his companies' ability to finance operations and pay debt.
Part of his group's ills stemmed from the companies' interdependence. OSX, for instance, depends for all its revenue on OGX, to which it leases oil production ships.
While Batista had promised the companies would generate significant business for each other, instead their problems spread from one to the others. Indeed, once OGX hit hard times it was almost certain that OSX would too.
Last week, the company appeared to get a lifeline when two banks agreed to refinance a 400 million real loan 17 days after it had come due. State-run Caixa Econômica Federal and Banco Santander Brasil SA, the lender that provided a guarantee to make the loan feasible, agreed to roll over the credit for an additional 12 months.
But it wasn't enough.
If the court approves OSX's bankruptcy request, the company will have 60 days to present a restructuring plan. OSX creditors will then have 30 days to endorse or reject the plan, though legal experts warn the proceedings could drag on for much longer than that.
OSX is 10 percent owned by South Korea's Hyundai Heavy Industry.
Stock market regulators on Monday suspended trading in OSX shares until its bankruptcy filing is official.